Rogers Park Suffers From Too Little New Construction: High Renter Demand Combined With No New Supply Pushes Rogers Park Rents Upwards
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- Category: Latest News
- By:
- Doug Imber
President, Essex Realty Group, Inc. and RPBG Director
Like other northside neighborhoods, the Rogers Park apartment market continues to experience strong rental demand. Occupancy rates across most rental properties are in the 95% range, which is generally considered full occupancy by investors.
In response to this high demand, other northside neighborhoods are supporting thoughtful new developments to increase their rental supply, to alleviate inflationary pressures on residents’ rents and to enhance the livability of their communities. For example, in the Edgewater and Uptown neighborhoods, there are currently more than 1,600 new apartments in the development pipeline. Further south in Lincoln Park and Lakeview, there are more than 2,200 apartments in the development pipeline. And in Evanston to the north, there are more than 400 units being developed.
For existing Rogers Park housing providers, this no-new-competition policy may be beneficial. But for renters, this policy has the opposite impact.
By contrast, Rogers Park has a fraction of those development pipelines, with just 130 units, most of which are still in the planning stages. Moreover, 75% of those apartments would be exclusively for residents making 60% or less of the area median income. While there is a critical need for more low-income housing, that is different than the demand for more affordable market rate housing. For example, school teachers, police officers and retail workers generally wouldn’t qualify for the 60% threshold, and further struggle as higher interest rates have made homeownership less accessible. What these nearby neighborhoods have recognized is that adding to the supply creates more affordable choices in the market as vacancy trickles down from higher to lower rent levels.
For existing Rogers Park housing providers, this no-new-competition policy may be beneficial. But for renters, this policy has the opposite impact. Over a longer period, Rogers Park residents may be forced to choose between higher rents as demand outweighs supply, or to moving to different neighborhoods where the new supply tempered rent growth. In the meantime, apartment investors can take comfort in the fact that in Rogers Park, it will be years before there is any meaningful new competition.
To illustrate the effects of supply, during 2022, Nashville, Tennessee added more than 11,000 new apartment units, a 7% increase in its total inventory. Rent growth has leveled from an 11% increase in 2022 to a more sustainable forecasted 2.5% increase this year.
While there are legitimate concerns regarding over-development, resident displacement and neighborhoods losing their character, there is also a thoughtful middle ground. Not only do new developments create more affordable housing, but also they enhance area businesses as neighborhood spending power increases. For Rogers Park in particular, which has spent decades struggling to nurture still-fragile commercial corridors, neighborhood dollars are too often exported to Evanston and Edgewater businesses, as commercial choices remain more limited compared to these other neighborhoods.
Progressive politicians injure their constituents if they cannot comprehend basic economics that choking off supply is the wrong response to increasing demand for any commodity, including rental housing.
There are those who might naively argue that rather than solving the obvious supply problem, the solution is instead to impose rent control, despite the fact that not a single credible economist believes rent control is a viable solution to the affordability challenge. Rent control may be a good sound bite, but Progressive politicians injure their constituents if they cannot comprehend basic economics that choking off supply is the wrong response to increasing demand for any commodity, including rental housing. Just as corrosively, rent control creates downward pressure on the quality of housing as rising expenses quickly outpace rent growth, making building upkeep less achievable or economical. This corrosion would quickly afflict the entire neighborhood, reversing decades of hard-earned progress.
Will Rogers Park learn from our neighboring communities? Will the fear of new development continue to push-up rents as demand outweighs supply? Will area businesses fall short of reaching their potential? Who will benefit from this misguided policy and who will suffer?
As the saying goes, “As scarce as truth is, the supply has always been in excess of the demand.” It is obviously time for more truth…and more apartments.
